Accounting for sales

Brightpearl will automatically create all accounting for sales and returns. This article explains the how each accounting journal is created to represent each sale or return made in the orders module.

There are three key points at which accounting is automatically generated for a sale or return - you can learn more about how the accounting journals are created later in this article:

Sales order:

  1. Invoicing the sales order
  2. Marking goods as shipped (when cost of sales accounting is on)
  3. Entering a payment

Sales return (credit):

  1. Crediting the sales credit
  2. Marking goods as received (when cost of sales accounting is on)
  3. Entering a refund

Accounting journals - sales invoice

Invoices are raised against sales orders. At the point of invoicing an accounting journal will be automatically created to record the sales revenue, tax and accounts receivable values.

Before multi-currency

All accounting is recorded only in base currency. A foreign currency sales invoice will be converted to base currency for accounting purposes and the customer account balance will also be in base currency.

With multi-currency

These types of journals will always record the transaction currency and the base currency, converted using the transaction exchange rate. The customer account balance will display the foreign currency balance and financial reports will display the base currency value.

acc-jnl-SI-header

acc-jnl-SI-rows

Accounting journals - shipping

Each time items are marked as shipped they will be removed from stock and the cost of goods sold accounting journal will be created.

These types of journals are always in base currency.

Learn all about cost of sales accounting in the accounting for inventory article

Accounting journals - customer payment

When a payment journal is recorded it will automatically update the customer account balance and mark any related invoices and orders as paid.

Before multi-currency

Payments can only be entered in your base currency and therefore all payment journals are recorded in base currency.

With multi-currency

These types of journals will always record the transaction currency and the base currency converted using the transaction exchange rate. A base currency transaction will show an exchange rate of 1.000000 and therefore the same values for the transaction debit and credits as the base debit and credit.

acc-jnl-SR-no-gain_loss-header

acc-jnl-SR-for-SI-no-gain_loss-rows

Accounting journals - exchange rate gains & losses

Before multi-currency

Exchange rate gains and losses must be manually entered as an adjustment. This is done via the customer account payment allocation screen and writing off any remaining balance against an invoice to the gains and losses account code.

With multi-currency

If a payment is made to clear the balance of a foreign currency invoice, but the payment has a different exchange rate from the invoice it is paying, Brightpearl will automatically create an adjustment for exchange rate gains/losses. This ensures that the invoice balance is cleared in both the foreign currency and the base currency. This is important since the customer account balance is calculated using the transaction (foreign) currency figures but financial reporting reads the base currency figures.

acc-jnl-SR-for_SI-with-gain_loss-header

acc-jnl-SR-for-SI-with-gain_loss-rows

Adjustment journal

acc-jnl-SR-with-gain_loss-adjustment-header

acc-jnl-SR-for-SI-adjustment-row

Accounting journals - sales credit

Credits are raised against sales credits (returns). At the point of crediting an accounting journal will be automatically created to record the decrease in sales revenue, tax and accounts receivable values.

Before multi-currency

All accounting is recorded only in base currency. A foreign currency sales credit will be converted to base currency for accounting purposes and the customer account balance will also be in base currency.

With multi-currency

These types of journals will always record the transaction currency and the base currency, converted using the transaction exchange rate.

acc-jnl-SC-header

acc-jnl-SC-rows

Accounting journals - returned stock

Each time items are marked as shipped they will be removed from stock and the cost of goods sold accounting journal will be created.

These types of journals are always in base currency.

Learn all about cost of sales accounting in the accounting for inventory article

Accounting journals - customer refund

When a refund journal is recorded it will automatically update the customer account balance and mark any related credits and returns as refunded.

Before multi-currency

Refunds can only be entered in your base currency and therefore all refund journals are recorded in base currency.

With multi-currency

These types of journals will always record the transaction currency and the base currency converted using the transaction exchange rate. A base currency transaction will show an exchange rate of 1.000000 and therefore the same values for the transaction debit and credits as the base debit and credit.

acc-jnl-SR-for-SC-no-gain_loss-header

acc-jnl-SR-for-SC-rows

Accounting journals - customer account allocations

Allocation is the process of matching on account payments, sales invoices and credits on the customer account to mark them as cleared without necessarily changing the customer account balance with an additional payment or refund.

When an allocation is made, an accounting journal will be created which matches up all the invoice credit and payment references.

Before multi-currency

Any exchange rate gains and losses must be manually entered as an adjustment. This is done via the customer account payment allocation screen and writing off any remaining balance against an invoice or credit to the gains and losses account code.

With multi-currency

If allocations clear the balance of a foreign currency invoice, credit and/or payment, but each transaction was entered with a different exchange rate, Brightpearl will automatically create an additional journal which creates an adjustment for exchange rate gains/losses. This ensures that the customer balance is cleared in both the foreign currency and the base currency. This is important since the customer account balance is calculated using the transaction (foreign) currency figures but financial reporting reads the base currency figures.

acc-jnl-allocation-rows

acc-jnl-SI_SC-allocation-rows

Adjustment journal

Note: The system exchange rate will be applied to the allocation. If this is different from both an invoice and credit being allocated it will result in an adjustment journal for each.

acc-jnl-allocation-gain_loss-header

acc-jnl-allocation-gain_loss-row

Accounts receivable account code

Brightpearl currently only allows a single account code to be used for accounts receivable (debtors control). This is always account code 1100.

Sales revenue account code

Revenue can be recognized in multiple sales account codes to help segregate financial reporting. The sales account code used for recognizing revenue is based on the following:

  • Sales account code assigned to the product

    A sales account code is assigned to each product record. This will be where the revenue from any sales of the item will be recorded by default. But it may be overridden by...

  • Sales account code assigned to the customer

    If a sales account code is assigned to the customer making the purchase then all sales revenue for those sales will be accounted for in the code assigned to the customer. This will override the sales account codes set on the product records. But this may be overridden by...

  • Sales account code manually assigned to the order row

    Before invoicing the order the sales account code can be manually assigned directly against an order row. The code chosen is where the sales revenue for that order row will be recorded. This will override the sales account code assigned to the product and/or customer.

Sales tax account code

Brightpearl currently only allows a single account code to be used for sales or output tax. This is always account code 2200.

Shipping charges account code

A default account code to be used for shipping charges to customers is chosen at Settings > Company > Accounting: Account (nominal) codes will be used automatically when:

  • An order downloaded from a sales channel with a shipping charge
  • A shipping charge is added to the sales order using the Brightpearl Shipping Quotes feature (activate in Sales settings)

If a shipping charge is added to an order as a miscellaneous row, the account code will need to be manually selected.

Sales discounts account code

Discounts can be applied to an order in several ways. The account code used in each case may be different:

  • Row discount - percentage

    If a discount is applied to a line item using the discount percentage column, the sales revenue amount accounted for this row will simply be reduced.

  • Row discount - amount (manual price entered)

    If a discount is applied to a line item using the discount percentage column, the sales revenue amount accounted for this row will simply be reduced.

  • Order discount - amount (negative order row)

    If a discount is added as a line item the account code can be manually set to a specific code for discounts.

  • Coupon discount (EPOS)

    If a discount is applied in EPOS by using a coupon, the account code used is the one defined at Settings > Company > Accounting: Accounts codes.

Have more questions? Submit a request

0 Comments

Please sign in to leave a comment.